Sheridan Glacier Lake in June
On September 10, Americans for Tax Reform sent the following letter to the Governor’s office opposing SB 113, a bill that raises taxes on companies doing business in Alaska.
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Dear Governor Dunleavy,
On behalf of Americans for Tax Reform (ATR) and our supporters across Alaska, I urge you to veto Senate Bill 113, legislation which expands Alaska’s 9.4% corporate income tax burden upon a host of companies that sell goods and services online. If enacted, SB 113 would have far-reaching negative consequences for both consumers and the broader state economy, leading to higher costs for Alaskan families and reduced access to goods and services, especially for those in Alaska’s most remote communities.
SB 113 is billed as a modernization effort to update Alaska’s tax code, primarily by adopting market-based sourcing and thus shifting tax obligations based on where customers are located rather than where businesses operate. The bill also introduces a single sales factor for apportioning income for “highly digitized businesses” in the state.
However, implementing these two changes without corresponding rate reductions or other offsets makes this bill a tax increase rather than a pure modernization effort. Like any tax hike, SB 113 would come with a price – paid by sellers both inside and outside Alaska – at a time when economic stability and growth should be the top priority.
Corporate taxes are ultimately be borne by Alaskans. Businesses faced with increased tax obligations will be forced to make difficult choices: raising prices on consumers, reducing employee wages, cutting jobs, or scaling back investment and expansion. In a state where the cost of living is already high and access to goods limited, this added financial pressure will make life more difficult and add strain to Alaska’s economy.
Moreover, Alaska’s corporate tax is already unusually high. The state’s 9.4% top rate ranks 4th in the nation. When the status quo already involves imposing a crippling tax burden at a very low threshold of $222,000, expanding the nation’s fourth-highest corporate tax rate to capture even more market participants and revenue is a costly mistake.
Further, the proposed tax structure risks deterring small and medium-sized businesses from entering, or continuing to operate in, Alaska’s market due to the added tax and compliance burdens. Fewer players in any industry, including the digital economy, implies reduced competition, limited consumer choice and slower economic growth across the state. The consequences would be borne most visibly by Alaskans in remote and rural areas, who rely heavily on online commerce to access affordable goods, essential services, and products not readily available locally.
The digital economy has become a vital economic lifeline for many Alaskans, offering opportunities for freelance work, online sales, and remote entrepreneurship. For individuals who rely on these platforms as a primary or supplemental source of income, the complex and burdensome new tax rules proposed under SB 113 could create significant compliance challenges. Rather than fostering innovation and economic inclusion, this legislation risks creating new barriers to upward mobility and discouraging Alaskans from participating in the modern economy.
For these reasons, Americans for Tax Reform opposes SB 113 and urges you to reject this tax increase on businesses, which will ultimately be borne by Alaskans. While modernizing the tax code can be a worthwhile goal, any new revenue generated should be offset by reductions elsewhere to avoid increasing the overall tax burden on families, workers, and entrepreneurs
Sincerely,
Grover Norquist
President, Americans for Tax Reform
